Qualcomm to license patents to Chinese mobile phone maker Xiaomi

One of many Qualcomm buildings is shown in San Diego, California November 3, 2015. REUTERS/Mike Blake

(Reuters) - Chipmaker Qualcomm Inc signed a licensing pact with Xiaomi Technology Co Ltd [XTC.UL] that allows the Chinese smartphone maker to use its patents to make and sell 3G and 4G devices.

Xiaomi has enjoyed a rapid rise with handsets it touts as cheaper but well-designed alternatives to Apple Inc’s iPhones.

Shares of Qualcomm rose 6.8 percent to $52.65 in early trade on Wednesday.

Under the agreement, the royalties payable by Xiaomi are consistent with terms of a rectification plan submitted by Qualcomm to China’s National Reform and Development Commission (NDRC).

Qualcomm entered into a settlement with NDRC over the company’s violation of China’s Anti-Monopoly Law.

The chipmaker said in November that it was facing delays in closing new licensing agreements in China and some Chinese customers were “improperly withholding” royalties on Qualcomm’s patents by changing the way they report sales.

Up to Tuesday’s close, Qualcomm’s stock had lost nearly a third of its value this year.